September 2, 2010

Carrick: Stocks, homes turn in lacklustre price performances

Canada and the U.S. have been in recovery since the third quarter of 2009. However, the pace of growth has slowed in both countries, Alex Carrick notes in his latest blog post.

U.S. real (i.e. inflation-adjusted) gross domestic product (GDP) growth in 2010’s second quarter dropped to 1.6% from 3.7% in the first quarter.

The most recent peak for U.S. GDP growth occurred in the fourth quarter of 2009, at 5.0%.

Canada had its strongest recent quarter in the first three months of this year, at 5.8%, although the gain in fourth-quarter 2009 was also solid, at 4.9%.

In this year’s second quarter, Canadian GDP growth fell back to 1.6%, a similar pattern of deceleration as occurred south of the border.

“sThe U.S. is hobbled by weak jobs markets and a barely conscious housing sector,”s Carrick says. “sThe latter is the aftermath of the sub-prime mortgage mess.”s

Bank-owned homes as a result of mortgage foreclosures continue to flood the market with excess inventory.

U.S. housing starts are approximately one third what they should be, if the economy were functioning normally.

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